US Dollar Forecast & FX Outlook - February 2026
Written by Ash AbbasiStay ahead of currency markets with MTFX’s US Dollar latest Monthly Forecast for 2026. This page delivers expert analysis on USD performance, including exchange rate trends, economic drivers, and directional outlooks for major currency pairs like USD/CAD, EUR/USD, and GBP/USD. Access dynamic tables, FX projections, and economic event calendars to guide your international transfers and global payment planning. Whether you're a business or individual, use MTFX tools to make smarter foreign exchange decisions.
US Dollar Forecast & FX Monthly Outlook — February 2026
The US dollar begins February 2026 trading in consolidation mode, as markets reassess global growth trajectories, interest-rate expectations, and the timing of potential Federal Reserve policy shifts later this year. After a volatile start to 2026, FX markets have entered a more selective phase, with relative performance across currencies diverging sharply rather than moving in lockstep against the USD.
While the dollar remains supported by its yield advantage, that support is increasingly fragile and data-dependent, leaving the greenback vulnerable to periods of softness, particularly against currencies backed by improving growth fundamentals or attractive carry dynamics.
Key observation:
The USD is no longer uniformly strong or weak. Instead, FX performance is increasingly driven by relative fundamentals, including growth resilience, capital flows, and interest-rate differentials, creating both risks and opportunities for businesses with foreign-currency exposure.
February 2026 Global FX Performance
| Currency Pair | Feb 01, 2026 | Weekly Change | Monthly Change | Yearly Change |
|---|---|---|---|---|
| USD / CAD | 1.36 | -0.47% | -0.63% | -5.44% |
| EUR / USD | 1.19 | -0.16% | 1.21% | 14.68% |
| GBP / USD | 1.37 | 0.07% | 1.70% | 9.95% |
| USD / JPY | 154.95 | 0.41% | -1.30% | 0.03% |
| USD / CHF | 0.77 | -0.53% | -2.44% | -15.06% |
| USD / CNY | 6.95 | -0.04% | -0.60% | -4.13% |
| USD / INR | 91.69 | -0.25% | 1.63% | 5.20% |
| AUD / USD | 0.69 | 0.45% | 3.79% | 11.60% |
| NZD / USD | 0.60 | 0.67% | 4.23% | 6.86% |
| USD / MXN | 17.46 | 0.65% | -2.47% | -14.10% |
What’s Driving FX Markets in February 2026
Federal Reserve Policy Uncertainty
Markets continue to debate when and how aggressively the Fed may ease policy later in 2026. While inflation has moderated, it remains sticky enough to keep policymakers cautious. This has resulted in range-bound USD trading, with sharp but short-lived reactions to each major US data release.
Global Growth Divergence
Economic momentum outside the US, particularly in parts of Europe and commodity-linked economies, has improved modestly. This divergence is reducing the dollar’s relative appeal, especially for longer-term investors rebalancing portfolios.
Risk Sentiment and Carry Trades
Improved risk appetite has benefited higher-yielding and commodity-linked currencies such as the AUD, NZD, and MXN. As long as global volatility remains contained, these currencies are likely to continue outperforming the USD on a relative basis.
| Currency Pair | Mar 2026 | Jun 2026 | Sep 2026 | Dec 2026 |
|---|---|---|---|---|
| USD / CAD | 1.37 | 1.36 | 1.35 | 1.35 |
| EUR / USD | 1.20 | 1.20 | 1.20 | 1.20 |
| GBP / USD | 1.36 | 1.36 | 1.36 | 1.35 |
| USD / JPY | 155.00 | 152.00 | 150.00 | 148.00 |
| USD / CHF | 0.78 | 0.79 | 0.79 | 0.79 |
| USD / CNY | 6.90 | 6.90 | 6.80 | 6.80 |
| USD / INR | 92.00 | 90.00 | 90.50 | 90.00 |
| AUD / USD | 0.70 | 0.71 | 0.72 | 0.73 |
| NZD / USD | 0.57 | 0.58 | 0.59 | 0.59 |
| USD / MXN | 18.40 | 18.70 | 18.50 | 18.20 |
February 2026 FX Highlights & Monthly Ranges
As a result, the US dollar is trading less as a one-way interest-rate story and more as a confidence and credibility trade. This has reinforced a range-driven FX environment, where currencies are responding to relative fundamentals, capital flows, and risk sentiment rather than a dominant USD trend. Well-defined ranges across major currencies are creating tactical opportunities for businesses to manage FX exposure proactively.
| Currency | Market News | |
|---|---|---|
CAD | Canadian Dollar (USD/CAD) USD/CAD remains tightly range-bound as Canadian fundamentals continue to offset residual US yield support. Stable commodity prices and resilient domestic demand have underpinned the Canadian dollar, while narrowing interest-rate differentials are limiting sustained USD upside. The recent change in Fed governance has increased sensitivity to US inflation and labour data, making USD/CAD more reactive to data surprises than policy guidance. Moves toward the lower end of the range may emerge on softer US data, while rallies toward 1.38 are expected to fade without a clear shift in policy expectations. Bias: Neutral to Mildly Bearish USD Feb 2026 USD/CAD Monthly Range: 1.35-1.39 | |
EUR | Euro (EUR/USD) The euro continues to trade with a constructive tone as investors reassess USD exposure in light of evolving Federal Reserve leadership dynamics. Greater uncertainty around future US policy signaling has reduced the dollar’s relative appeal, supporting incremental EUR strength. USD/EUR remains biased higher (weaker USD), particularly if incoming US data reinforces the view that policy normalization may be slower or less predictable under the new governance structure. Bias: Bearish USD Feb 2026 EUR/USD Monthly Range: 1.15 – 1.20 | |
GBP | British Pound (GBP/USD) Sterling remains driven largely by USD movements, with domestic UK drivers playing a secondary role this month. Relative clarity in UK policy expectations has contrasted with increased uncertainty around the US policy path, helping to stabilize GBP performance. USD/GBP is expected to remain range-bound, with volatility centered around US economic releases and any shifts in messaging from Federal Reserve officials adapting to the new leadership environment. Bias: Mildly Bearish USD Feb 2026 GBP/USD Monthly Range: 1.30 – 1.37 | |
JPY | Japanese Yen (USD/JPY) USD/JPY remains highly sensitive to changes in US rate expectations. The leadership transition at the Fed has heightened market focus on communication consistency, increasing the risk of abrupt yield moves that could favor yen strength. While interest-rate differentials still structurally support the USD, downside risks have increased as markets question how quickly and decisively policy signals will be delivered under the new governance framework. Bias: Bearish USD with downside skew Feb 2026 USD/JPY Monthly Range: 152.00 – 157.00 | |
CHF | Swiss Franc (USD/CHF) The Swiss franc continues to benefit from its safe-haven role in an environment of policy uncertainty. Even without elevated market stress, the perception of reduced predictability in US monetary signaling has supported CHF demand. USD/CHF remains biased lower, with gradual USD depreciation more likely than abrupt moves unless risk sentiment shifts sharply. Bias: Mild CHF Strength Feb 2026 USD/CHF Monthly Range: 0.76 – 0.80 | |
CNY | Chinese Yuan (USD/CNY) USD/CNY remains tightly managed, with authorities emphasizing stability amid global policy uncertainty. While broader USD softness could exert mild downward pressure, any moves are expected to be orderly and incremental. The pair remains one of the least volatile avenues for USD exposure this month. Bias: Stable to Mildly Lower USD Feb 2026 USD/CNY Monthly Range: 6.88 – 6.98 | |
INR | Indian Rupee (USD/INR) Structural capital flows and energy import demand continue to anchor USD/INR. While shifts in US policy leadership have influenced broader USD sentiment, their impact on INR remains muted due to domestic structural factors. USD/INR is expected to remain well-contained, making range-based hedging strategies particularly effective. Bias: Range-Bound with Upward USD Drift Feb 2026 USD/INR Monthly Range: 90.80 – 92.10 | |
AUD | Australian Dollar (AUD/USD) The Australian dollar remains supported by improving global risk sentiment and commodity demand. Increased uncertainty around US policy direction has further reduced USD appeal against higher-beta currencies. AUD/USD remains biased higher, with rallies likely to be corrective unless global conditions deteriorate. Bias: Bearish USD Feb 2026 AUD/USD Monthly Range: 0.68 – 0.72 | |
NZD | New Zealand Dollar (NZD/USD) The New Zealand dollar continues to track broader USD sentiment. As markets adjust to evolving Fed leadership dynamics, NZD has benefited modestly from the absence of strong USD conviction. NZD/USD is expected to grind higher within its established range. Bias: Mildly Bearish USD Feb 2026 NZD/USD Monthly Range: 0.59 – 0.62 | |
MXN | Mexican Peso (USD/MXN) The Mexican peso remains supported by strong carry dynamics and stable capital inflows. Reduced confidence in sustained USD strength under the new Fed governance framework has reinforced downside pressure on USD/MXN. While consolidation phases are likely, the broader bias remains toward peso strength. Bias: Bearish USD Feb 2026 USD/MXN Monthly Range: 17.20 – 17.90 | |
What Economic Data to Watch This Month
Early-month employment data will set the tone for USD sentiment, while mid-month inflation releases will be closely scrutinized for confirmation that price pressures are easing sustainably. Markets will also focus on consumer confidence and manufacturing indicators to assess whether economic momentum is slowing enough to justify a more accommodative policy stance.
With a recent change in Federal Reserve governance adding an additional layer of uncertainty, any deviation from expectations could trigger outsized FX reactions, particularly across USD-sensitive pairs.
| Currency | Date | Event |
|---|---|---|
| USD | Feb 2, 2026 | JOLTS Job Openings |
| USD | Feb 3, 2026 | ADP Nonfarm Employment Change |
| USD | Feb 5, 2026 | Nonfarm Payrolls |
| USD | Feb 5, 2026 | Unemployment Rate |
| USD | Feb 10, 2026 | Inflation Rate |
| USD | Feb 16, 2026 | Retail Sales |
| USD | Feb 17, 2026 | FOMC Minutes |
| USD | Feb 18, 2026 | Goods Trade Balance |
| USD | Feb 19, 2026 | Core PCE Price Index |
| USD | Feb 19, 2026 | GDP |
Written by
Ash Abbasi
Director of SalesAsh Abbasi is the Director of Sales at MTFX, specializing in corporate FX and cross-border payment solutions for Canadian businesses. With a background in sales leadership and account management across global markets, he helps clients optimize international transactions and manage currency risk. Ash holds a degree from Aston Business School and a postgraduate diploma from Humber College.
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What drives monthly changes in the US dollar exchange rate?
The USD dollar exchange rates shift monthly based on economic data, monetary policy, and global events. While some changes are minor, others can significantly impact international payments and investments.
Key factors behind monthly USD moves:
What drives monthly changes in the US dollar exchange rate?
The USD dollar exchange rates shift monthly based on economic data, monetary policy, and global events. While some changes are minor, others can significantly impact international payments and investments.
Key factors behind monthly USD moves:
Federal Reserve policy
Rate hikes or dovish signals can strengthen or weaken the dollar.
Inflation reports
Data like CPI and PPI shape expectations for interest rate changes.
Employment figures
Nonfarm payrolls and jobless rates reflect overall economic health.
GDP growth
Strong or weak economic performance affects USD sentiment.
How much can the US dollar move in a month?
The US foreign exchange rates can fluctuate by 1% to 3% against major currencies in a typical month. However, during periods of high volatility—such as interest rate hikes or geopolitical shocks—monthly movements may exceed 5%, especially against currencies like the Japanese yen or emerging market pairs.
These shifts directly impact the cost of international transactions, from sending money abroad to paying overseas suppliers. Staying informed on the USD forecast and understanding what drives these changes helps individuals and businesses make smarter financial decisions and manage currency risk more effectively.
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